The latest channel data shows that the activity of the Bitcoin network has declined in recent months, the Blockchain metrics reaching a new hollow recently.
Why does the activity of the Bitcoin network drop?
In a new article on the X platform, the manager of cryptocurrency, Julio Moreno, discussed how Bitcoin witnesses an unusual period of low transaction activity, almost empty mempool and transaction costs falling to 1 Sat / VB. This represents the lowest level of activity of the network since March 2024, indicating a significant drop in demand on the chain.
For the context, Mempool refers to a temporary storage zone where Bitcoin transactions pending await treatment. Mempool generally remains congested during periods of high demand on the chain and network activity. However, new data on the chain show that most transactions have been confirmed, leaving the mempool almost empty.
Source: JJCMoreno/X
An almost empty mempool is a rare phenomenon often associated with the activity of the chain or the dynamics of the changing market. According to Moreno, the main contributor to this drop is the excitement of discoloration around runes and BRC-20 tokens.
The Runes and the BRC-20 token standard are protocols that have enabled the creation and shot of fungible and non-butts on the Bitcoin blockchain. Although these protocols encountered a significant overhaul when launching, the initial excitement did not result in sustained use.
Source: JJCMoreno/X
However, at the top of the Runes and the BRC-20 frenzy, the number of transactions confirmed on the Bitcoin network crossed the milestone of 1.5 million in a single day. More specifically, the Pioneer blockchain treated more than 1.6 million unique transactions between the sender and the receivers on April 23, 2024, the launch of Bitcoin Runes playing a central role.
The drop in the number of transactions has broader implications for various components of the pioneer blockchain, including minors’ income. Minors rely on transaction costs as another source of income, especially since the block rewards have been reduced from the recent event by half. Consequently, an prolonged period of low costs could have an impact on the profitability of mines, potentially influencing the distribution of the network’s hash.
BTC price implications
An almost empty mempool and a low transaction activity are not exactly the best combinations for a positive price action. More specifically, this could suggest a low speculative interest and a reduction in investors’ enthusiasm, leading to a consolidation of the Bitcoin price.
To date, BTC is estimated at around $ 100,450, with a drop of almost 2% in the last 24 hours. According to Coingeko data, the first cryptocurrency has lost around 3.5% of its value in the last seven days.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Star image created by Dall-E, tradingView graphic
